Goldman Sachs analysts said in a note to clients this week that the firm expects limited upside in Henry Center prices until 2025. This led Goldman Sachs to raise its BalSum24 Henry Hub forecast to $2.65/mmBtu (from $2.15/mmBtu) and forward to $2.88/mmBtu.
The revised forecast comes despite continued declines in production, which has remained below 99 Bcf/d over the past few weeks. Goldman Sachs has lowered its production forecast for the remainder of the summer by 0.5 Bcf/d to 100.6 Bcf/d.
Despite the revision to its natural gas price forecast, Goldman Sachs still sees limited upside. “We believe continued price increases will result in (1) less natural gas flaring from coal-to-gas conversions and (2) an easing of production outages, preventing an actual tightening of the market and keeping inventories adequate.” the analysts wrote in the note. This is an elevated road, which again may increase the risk of congestion.
Prices are only expected to rise significantly once winter begins due to increased feed gas demand from new LNG projects. “This view is further supported by the additional support we are now seeing in demand as our gas combustion model changes to incorporate higher electricity loads from data center and electrification growth,” the analysts said.
Therefore, Goldman Sachs continues to be bullish on the Sum25 Henry Hub contract price at $4/mmBtu, while the forward contract price is $3.37/mmBtu. They recommend going long on Henry Center on June 25th.
